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NU orphan cash deal disappoints advisers

Advisers feel let down by the Norwich Union £1bn reatt- ribution deal reached last week after nearly two years of talks with policyholder advocate Clare Spottiswoode.

It offers over a million policyholders in the CGNU Life and CULAC funds a one-off cash payment averaging £1,000 to sign away rights to future distributions from the funds’ inherited estates.

This is in addition to an earlier agreement for a special distribution of £2.1bn from the funds’ surplus, meaning policyholders that accept the offer will effect- ively take a 70 per cent share of the surplus.

Spottiswoode said she was “delighted” with the outcome but some advisers are disappointed with the deal.

Syndaxi Financial Planning principal Robert Reid says: “This deal could have been struck in one afternoon, so when you look at how much it has cost and how long it has taken I do not think Spottiswoode should be congratulated.”

Worldwide Financial Planning IFA Nick McBreen says: “This is nothing to get excited about. It is a small benefit for clients who will have to maintain their investments in the with-profits funds with a potential loss on the upside of being invested elsewhere.”

Aviva’s interim results show a 14 per cent increase in UK life profits from £413m to £471m for the first half of this year while life and pension sales are up slightly by 1 per cent to £1.59bn.

Fitch Ratings senior dir- ector of insurance David Prowse says the first interim results from life offices are “pleasantly surprising”.

He says: “There could be a time lag before recession fears have an impact on life and pensions as premiums often come out on direct debit so it is not something that consumers automat- ically think to cut back on. The gloomy news could be still to come.”

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